Solving next round of pension problems and child care crunch is up to the governor, senator says

The governor and legislative leaders need to figure out a fix to keep mental health centers and other agencies from getting strangled by pension payments and to keep them from bailing out of the Kentucky Retirement System, said Sen. Julie Denton, R-Louisville.

Denton, speaking to Pure Politics after the Jefferson County Lincoln Day dinner on Friday, said she sympathizes with mental health agencies, like Seven Counties Inc., that handles treatment for children and adults in the Louisville area. Seven Counties filed for bankruptcy protection as its payments to the Kentucky Retirement System to cover its existing and retired employees are expected to grow to be 40 percent of the center’s payroll budget by next year. Seven Counties’ president answered questions about that last week on Pure Politics.

Seven Counties could be a test-case for the 12 other mental health agencies and public health departments across the state that will see skyrocketing pension contributions. Many of them were allowed into the public pension system in 1979 even though they’re considered quasi-governmental organizations. And the challenge for the Kentucky Retirement System is that if they bail out of the system, the pension fund loses income it’s counting on.

Here’s what Denton, who chairs the Senate Health and Welfare Committee, said about this catch-22:

Another pending problem is the Kentucky Health and Family Services Cabinet budget deficit, which has prompted leaders to eliminate a stipend that help pay for day care costs for families earning between the poverty rate and 150 percent of the poverty rate. The cut is slated to take effect July 1.

That will have a financial ripple effect across the economy affecting day care center owners and workers and the children and parents, who might have to choose between whether to continue working or stay home with their kids.

“This is his decision based upon what the cabinet is doing. And so the governor would need to find the dollars in order to keep those dollars flowing for the care of those children. I think it’s extremely important for the safety of those children and so that families could continue to work and not become dependent back on the state,” Denton said.

Beshear told Pure Politics the state is flat out of any extra cash this year and will have to wait until the 2014 session when lawmakers craft the next two-year budget to see if the funding could be restored in fiscal year 2015, which begins July 1, 2014.